The Federal Insurance Contributions Act (FICA) provides for a federal system of old age, retirement, disability, and health benefits for workers and their families.  This system is financed through Social Security and Medicare taxes.  You and your household employee pay equal amounts for these taxes.

For Social Security, the tax rate is 6.2% each for you and, for 2012, 4.2% for your household employee on the first $110,100 of wages.  For Medicare, the rate is 1.45% each on all wages.  If you do not deduct your household employee's share from his or her wages, you must pay the household employee's share of this tax as well as your share (a total of 10.4% for Social Security and 2.9% for Medicare).  NannyPay automatically calculates the amount of FICA taxes you must withhold from your household employee's pay.